Telstra launches ‘radical’ new phone plans, killing excess data charges and lock-in contracts

Australia’s biggest telco will force millions of customers to choose a new phone plan. But the major overhaul comes with some good news for consumers.

More than 11 million Australians will be forced to change their mobile phone plans after the country’s largest telecommunications provider launched a major overhaul of its services today.

But Telstra’s “radically” different plans come with significant incentives for users, as the company revealed it would ditch “lock-in” contracts, kill off excess data fees, and undercut phone plans from traditionally cheaper rivals Optus and Vodafone.

The move is part of a $2.5 billion cost-cutting scheme announced last year that will see the telco lose 8000 jobs.

Telstra plans to ditch “lock-in” contracts and kill of excess data fees as part of the overhaul. Picture: AAP

Telstra’s changes will see 1800 offerings currently used by its customers streamlined into just 20 plans, with 19 unveiled today.

They include five postpaid mobile phone plans ranging from $40 a month for a service with 2GB of data, to $100 a month for a plan with 150GB data.

MORE: Why Telstra must cut jobs (and the NBN is to blame)

Telstra’s new $50 plan, offering 15GB of data, is priced at $5 less than similar offerings from both Optus and Vodafone.

Telstra’s new services will also no longer come with a contract attached, allowing users to change their service monthly or even leave the telco, and internet downloads will just be slowed after users reach their monthly limit.

Telstra chief executive Andy Penn told News Corp the new plans would also address common customer “pain points” by removing fees for paper bills and eliminating bundles many customers did not use.

“Customer expectations are changing and larger companies have got to be prepared to be bolder in terms of disrupting themselves before somebody else does it to them,” Mr Penn said.

“We’re taking on that challenge and trying to lead the way in transforming the telecommunications industry and how we serve our customers.”

Telstra chief executive Andy Penn told News Corp the new plans would also address common customer “pain points”. Picture: Supplied

Mr Penn said Telstra customers would still be able to purchase phones on contracts over 24 or 36 months, and would also be able to add other “value-added services” to their plans, such as international roaming and entertainment services.

All existing Telstra customers will have to move to the new plans as part of the pricing overhaul, however, which Mr Penn admitted could take longer than the company’s goal of two years.

“We’ve got eight million postpaid customers so I’m sure there will be some cohorts of customers where more engagement will be required to ultimately move them across,” he said.

“Given the pain points we’re addressing in this new design, there are very good outcomes for customers so I’m sure we’ll be able to move them across.”

Telstye managing director Foad Fadaghi said Telstra’s pricing overhaul could inspire more changes from other telcos and had the potential to win over new customers.

“It isn’t reinventing the wheel but because they’re such a large brand in the market, it has the potential to shake-up how things are done,” Mr Fadaghi said.

“Any plans that make it simpler for customers should be well received, particularly if excess data charges disappear. The biggest fear some people have is racking up expensive additional data charges with the use of streaming video.”

But while the new plans removed several small fees from phone plans, Mr Fadaghi warned Australian phone users not to expect significant cost drops as there was “a floor to how low their prices could go” while also rolling out new 5G networks and providing reliable services.

Telstra’s new plans also spell out its plans to charge customers for access to its new 5G network, with a $15 monthly fee that will come into force from July 2020.

Originally published as Telstra launches ‘radical’ new phone plans, killing excess data charges and lock-in contracts